A year-end change from February to December was approved by SARS for my client. Before the year end change was affected on e-filing the tax returns for the 2015 and 2016 years of assessment were issued. Currently these tax returns reflect a year end of Fe
Important:
This answer is based on tax law for the year ending 31 December 2015.
Answer:
The Companies Act, section 27(4) (as does the Close Corporation Act), allows for the board of a company to change its financial year end at any time, by filing a notice of that change, but-
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it may not do so more than once during any financial year;
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the newly established financial year end must be later than the date on which the notice is filed; and
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the date as changed may not result in a financial year ending more than 15 months after the end of the preceding financial year.
From the information provided, it appears that CIPC approved the change for a period of more than 15 months.
We don’t know when CIPC changed the financial year end, but submit that it can be done retrospectively. We will accept that the notice of the change was filed before February 2015.
In terms of this definition of financial year in section 1(1), the company needed approval from SARS to end its financial year on 31 December – approval by CIPC is not sufficient – from the information and our assumption, we accept that this was done before the last day of February 2015. In addition to this approval the company must also specifically request SARS to change the provisional tax dates / returns to 30 June (and 31 December). If this was not done SARS will not be able to process the IRP6’s as it will not have issued one.
As the change of financial year end was approved by, the SARS system will require two IT14’s to be submitted in the 2015 year of assessment (the 2016 year will then end on 31 December and will be a full 12 months). The SARS system couldn’t handle the two returns in the 2015 year of assessment, and it was often necessary to combine them. That was done by using the correct return function on efiling.
We don’t believe that it is possible for the taxpayer to ‘delete’ the returns submitted. We suggest that you request SARS, under section 98 of the Tax Administration Act. It allows, in paragraph (1), that “SARS may, despite the fact that no objection has been lodged or appeal noted, withdraw an assessment which … (b) was issued in respect of the incorrect tax period”.
Once withdrawn, the correct returns could be submitted.